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December 30, 2016

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Home » District » Pudong

Streamlined policies boost business activity in Shanghai Free Trade Zone

THE China (Shanghai) Pilot Free Trade Zone covers about one-tenth of the Pudong New Area, but has accounted for three-quarters of the area’s total economic output since it was established in September 2013.

Accordingly, it accounts for about one-fiftieth the size of Shanghai but represents one-fourth of the city’s gross domestic product.

These results demonstrate that institutional innovation, rather than preferential policies, can be a sustainable driving force for long-term economic development.

The FTZ and Pudong New Area will further promote institutional innovations moving forward, according to Jian Danian, deputy director of Pudong. Jian is also deputy director of the zone.

With an area of 120 square kilometers, the Shanghai FTZ houses more than 37,000 enterprises, including 6,300 foreign-funded companies.

Among them, more than 90 percent were established by registration-based procedures, instead of being examined case-by-case by authorities ahead of their final approval.

Most foreign-funded businesses were registered in just one day within the zone, compared with eight weekdays previously.

Moreover, declaration materials required for registration in the zone have been reduced from 10 copies to three, making registration easier for foreign investors. In most instances, examination and approvals for the establishment of new businesses will be replaced by registration and recording procedures, while administration pertaining to industry access will be enhanced, according to Jian.

In addition, the already simplified procedures for investors to establish a company in the zone will be further streamlined, allowing applicants to obtain all necessary documents at a single counter in the near future, explained Jian.

At present, this process involves visits to several counters belonging to different authorities at the FTZ’s administrative service center.

Reforms to the business registration system are just one of the 54 measures implemented at the FTZ to expand openness and promote progress in fields like finance, shipping, trade, culture, social and professional services.

Before the establishment of the FTZ, there were 14 different types of business licenses, which have now been unified into a single license. Capital registration policies have also been eased; now investors can start a business with as little as 1 yuan (14 US cents), leaving commerce and industry authorities to register the amount of capital a company pledges to subscribe.

Business in the fields of financial leasing, engineering design, travel services, value-added telecommunication services, ship management and certification testing have boomed, with investments involving more than 1,800 projects.

Through the high-efficiency trade supervision system in the FTZ, waiting times for imported cargo to enter the bonded area have been reduced by two-to-three days, while logistics costs have decreased by an average of 10 percent.

The “go through customs ahead of declaration” policy has been widely considered the most effective move in trade reform among enterprises.

In accordance with the “one counter” model established in the FTZ, trade firms may fulfill all import and export procedures — including customs declaration, inspection, release, payment and dispersal — through just one counter and receive feedback at the same platform.

Regulators can also exchange information, do business processing and get feedback via the same platform. Data submitted by enterprises in the shipping-declaration period have been reduced by 65 percent, while in the declaration-of-goods period data have been cut by 24 percent.

Are two shipments by the same company permitted to be put together at the same place? This problem has plagued many logistics companies. A regulatory approach to cargo status classification has been on trial in the FTZ which allows domestic goods into the zone to use LCL (less than container load) and distribution services together with bonded goods.

Enterprises that have taken parts in the trial have seen their logistics and warehousing costs fall by more than 50 percent on average, while business volume has increased by 40 percent. Some traditional logistics companies have started playing more important roles in logistics distribution and trade settlement.

The creation of free trade accounts has become a highlight of financial institutional innovation in the FTZ. All financial institutions in Shanghai are connected to the free trade account system.

By the end of October, around 58,000 free trade accounts had been opened in the zone to deal with cross-border settlements equalling 7.7 trillion yuan (US$1.11 trillion). These have also involved 107 countries and regions and 26,000 domestic and overseas firms.




 

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